UAW Turns to Ford After Chrysler Workers OK Contract

Reuters

Sunday, 28 Oct 2007 | 11:15 AM ETReuters

SHARES

The United Auto Workers union already has seen two strikes and significant dissent in this year's round of contract talks, but the fight could be just beginning as the union turns to its last bargaining partner, Ford Motor.

Most analysts agree Ford is in dire financial straits and needs more help from the UAW than General Motors and Chrysler. The No. 2 U.S. automaker lost more than $12 billion last year and has mortgaged its assets to fund its turnaround plan. That plan calls for the closure of 16 plants by 2012.

Geoff Robins

Ford announced today that it is cutting production by 21% resulting in downtime at the assembly plant in St. Thomas Ontario on Friday Aug. 18, 2006. Ford Motor Co. announces sharp cuts in its North American production that would force it to partially shut down plants in the U.S. and Canada in the fourth quarter. (AP Photo/Canadian Press, Geoff Robins)

But the union needs to convince its members that it's getting the best agreement possible or it will be unable to get members to ratify the agreement. Members may be looking for the kinds of job security agreements GM granted in its contract, which promises new products for 16 of its U.S. assembly plants.

Chrysler didn't make such extensive promises and its contract passed by a narrower margin. Ford isn't in a position to guarantee future jobs, either, said Erich Merkle, vice president of auto industry forecasting for the consulting firm IRN. Ford's U.S. market share has been steadily dropping, from 26 percent in the early 1990s to about 15 percent this year, and it's using less than 80 percent of its U.S. plant capacity.

"Ford has to close plants. I don't know how Ford can provide a lot of security going forward in terms of jobs," Merkle said. "That made it difficult at Chrysler to get the contract passed, but if you think it's a problem for Chrysler, it's even a bigger problem for Ford."

Chrysler Workers Back Deal

Chrysler workers ratified their contract in voting that ended early Saturday. The UAW said 56 percent of production workers and 51 percent of skilled trades workers voted in favor of the pact. The percentages voting in favor were much higher among clerical workers and engineers represented by the union.

The union reached the agreement with Chrysler on Oct. 10 following a six-hour nationwide strike. Like an agreement ratified earlier by GM workers, the Chrysler contract establishes a union-run trust to cover retirees' health care and allows the company to pay lower wages of $14 an hour to about 11,000 noncore, non-assembly workers. Chrysler assembly workers now make a starting wage of $28.75 per hour.

The new contract covers about 45,000 active workers at Chrysler and more than 55,000 Chrysler retirees and 23,000 surviving spouses. It will expire on Sept. 14, 2011.

"We are pleased that our UAW employees recognize that the new agreement meets the needs of the company and its employees by providing a framework to improve our long-term manufacturing competitiveness," Tom LaSorda, Chrysler's vice chairman and president, said in a statement. LaSorda was the company's chief negotiator.

At GM, 66 percent of workers ratified the deal. But at Chrysler, many workers were angered by the contract because it made fewer promises than GM's. Some workers also were upset about the two-tier wage structure.

"I just don't like the idea ... that a guy working next to me may have to settle for a less wage," said Jeffery Cole, 48, of Rockford, who has worked 13 years for Chrysler, the last two in Belvidere, Ill., as a quality inspector.

Tough Choices

Earlier Saturday, 55 percent of workers at Cole's plant, which was the last plant to vote, opposed the contract, according to a person who was briefed on the vote. The person requested anonymity because the person wasn't authorized to speak on vote totals.

"Our members had to face some tough choices, and we had a solid, democratic debate about this contract," UAW President Ron Gettelfinger said in a statement. "Now we're going to come together as a union -- and now it's on the company to move ahead, increase their market share and continue to build great cars and trucks here in the U.S."

As recently as Tuesday the pact was losing after large locals in Kokomo, Ind., voted it down, but workers at four Michigan assembly and stamping plants in Sterling Heights and Warren had a strong turnout on Wednesday and voted largely in favor. The Sterling Heights and Warren votes pushed the favorable vote ahead.

Gary Chaison, a labor specialist at Clark University in Worcester, Mass., said the UAW turned things around with heavy lobbying at the remaining plants.

"They put forth the view, very effectively, that this was the best they could do at the time," Chaison said. "It's not that this was a strong agreement, but that if we reject the agreement, we're going into a world of uncertainty."

Chaison said many workers felt it wasn't a good time for a fight. Chrysler became a private company in August, when the private equity firm Cerberus Capital Management bought a controlling stake in the automaker. It has recently overhauled management and is reviewing its products.

Chaison said Ford will likely try to head off opposition to the contract with carrots such as a profit-sharing plan. But he said Ford could still face a strike as the UAW tries to show workers it is bargaining hard.

"Nowadays, you have to have a strike in order to convince the workers you did all you could," Chaison said. "Ford is going to be asking for some major wage concessions from the union and they won't be able to guarantee future work."

But Aaron Bragman, an auto industry analyst with Global Insight, said he doesn't think the contentious nature of the Chrysler ratification will carry over to Ford. Ford workers already have agreed to competitive operating agreements to cut costs at plants, and they recognize the company is in trouble, he said.

"Ford plants are already in the mind-frame that the company needs help and we're going to be able to provide it," Bragman said.

Ford spokeswoman Marcey Evans would not comment on the ongoing negotiations.